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Pfizer-Medivation Call It Quits

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Medivation, Inc. (MDVN - Analyst Report) and Pfizer Inc. (PFE - Analyst Report) are finally giving up on their efforts to develop Alzheimer’s candidate, dimebon (latrepirdine), with the companies reporting disappointing results yet again on the candidate. This time, dimebon failed to achieve the co-primary endpoints in a phase III study, CONCERT, which was conducted in patients with mild-to-moderate Alzheimer’s disease.

Medivation and Pfizer said that dimebon failed to achieve statistical significance for either of the two co-primary endpoints (Alzheimer’s Disease Assessment Scale and Alzheimer’s Disease Cooperative Study – Activities of Daily Living [ADCS-ADL]) of the study.

Expectations Were Already Low

The study results did not come as a huge surprise. We had low expectations from the CONCERT study given dimebon’s dismal track record. Medivation and Pfizer had already suffered two major setbacks where dimebon’s development program is concerned.

Way back in March 2010, dimebon had failed to achieve both its primary and secondary endpoints in a phase III study for Alzheimer’s. Then, in April 2011, dimebon failed to achieve the primary endpoints in a phase III study for Huntington disease.

With dimebon failing in the CONCERT study, Medivation and Pfizer have decided to discontinue the development of the candidate for all indications, including an ongoing open label extension study in Alzheimer’s disease.

End of the Road for Pfizer-Medivation Collaboration

The disappointing CONCERT data also marked the end of the collaboration agreement between Medivation and Pfizer for dimebon. Once again, the termination of the agreement did not surprise us – firstly, Pfizer already has another Alzheimer’s candidate, bapineuzumab, in its portfolio that is being developed with Johnson & Johnson (JNJ - Analyst Report).

Secondly, Medivation’s future lies with its prostate cancer candidate, MDV3100, which delivered impressive interim data in Nov 2011. The company and partner Astellas could be in a position to file for US approval in 2012.

Our Take

The termination of the dimebon deal signifies yet another pipeline failure for Pfizer. At the time of signing the agreement, Pfizer had made a payment of $225 million to Medivation. As far as Medivation is concerned, the shares were not affected significantly by the CONCERT results – this indicates that expectations from this study and the candidate were already very low.

Investor focus had already shifted to MDV3100. Medivation and partner Astellas are all set to conduct a pre-NDA meeting with the FDA in early 2012. We believe the companies will file for regulatory approval soon thereafter and expect MDV3100 to hit the market in 2013.

Based on the data that we have seen so far, we believe MDV3100 has blockbuster potential and could be a game-changer for Medivation. We currently have Neutral recommendations on both Pfizer and Medivation. Both companies carry a Zacks #3 Rank (short-term Hold rating).

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